We live in a nice neighborhood in Washington, DC; anyone living outside a city would probably find our mortgage astronomical. It is not inexpensive. However, I also find that my actual cost of life is often less than folks who live in the suburbs or rural areas, depending on their choices.
The astronomical mortgage does not just pay for my home. It also plants me in a location where I have access to the Metro (the local subway system) a block away and Capital Bikeshare bikes across the street. I could get anywhere in the city or Northern Virginia with a Capital Bikeshare membership that costs less than $100 a year. A car is a luxury good in this area since I could get everywhere I need to go for a minimal expense.
In a rural or suburban area, transportation costs below $100 annually are impossible. The cost of car insurance, gas for the car, maintenance on the car, tolls, and a car payment until the car is paid off in full add up quickly. Altogether, these expenses can total hundreds, if not more than $1,000, every month for folks that drive frequently or cover long distances.
But most folks will just compare housing costs between urban and suburban or rural areas and say living in a city is too expensive. In reality, it often costs less, depending on your financial priorities.
Moving from Las Vegas, NV to Washington, DC: A Case Study
We moved from Las Vegas to Washington, DC in 2015. While Las Vegas is a large city, we did not live in the middle of the Strip. We lived just south of Summerlin in an adorable suburban area. Our combined rent cost $500 total at the end of our time in Las Vegas. (Yes, we had roommates.) However, navigating without a car in Las Vegas is extremely difficult, and car insurance prices were high enough that I assume the rates were calculated as though the entirety of my driving occurred on the Las Vegas Strip between 10 p.m. and 4 a.m. while drunk drivers and pedestrians filled the streets.
Patrick and I each had a car in Las Vegas and initially planned to downsize to one car in Washington, DC. We also planned to live a bit farther out of the city and commute in to save on rent. However, the math worked out a bit like this for a one-bedroom that was farther from downtown Washington, DC:
If we lived in or near downtown Washington, DC without a car, exclusively using our feet and the Metro as transportation with the exception of occasional car rentals, those expenses looked more like this:
Living in Foggy Bottom, within walking distance from school and work, proved less expensive than living in an apartment that cost $700 a month less and paying for the associated car expenses. Additionally, the approximate Metro cost for the person not taking the car to commute was also higher because they would not have the option to walk to work or school rather than take the subway.
In reality, the overall costs of the two scenarios were quite similar and would fluctuate enough to trade off which was more expensive. However, since cost was similar, living in Foggy Bottom had a huge additional benefit that living somewhere like Bethesda, MD did not: We had more time. Since we were both working full-time and either going to school full-time or studying for the bar exam that first year, time was a scarce resource, and choosing to live in an expensive apartment to maximize it proved beneficial.
Combine Housing and Transportation Costs
The most common deficiency we see in folks moving from a rural to an urban area or vice versa is directly comparing housing costs alone. The rent in a suburb in Las Vegas will be less expensive than the rent in downtown Washington, DC. However, my car insurance in Las Vegas cost about $380 a month my first year living there. (Yes, it was quite literally almost as much as my $425 rent.) In DC, I did not have a car or the car insurance that comes with one for the first five-and-a-half years.
While a lot of costs vary between rural, suburban, and urban areas, listing out all housing and transportation costs associated with one location and comparing them to all housing and transportation costs in the new locale can give you a better comparison of your expenses or potential expenses in different locations. This does require a bit of nuance and thought on your part to consider if you would walk more in one location, use a bike to get around, use more gas, have more tolls, or anything else. Only you can create a realistic set of parameters for how you would likely live your life in a certain area. These parameters can even make a place that would be less expensive for someone else more expensive for you, or vice versa.
Hidden Costs in Locales: Shared Resources and Social Expenses
Your total cost of living in a rural, suburban, or urban area depends on your interests and priorities. If you and your spouse like to play tennis five days a week, you can use one of the many free tennis courts at the closest recreation center in a city. If you live in a suburban area, you may have one court maintained as part of your community’s homeowner’s association (HOA) fees. In a rural area or less populous suburban area, you may have to spend hundreds of dollars a month for a country club membership to access a tennis court even though land is more plentiful where you live! On the other hand, if you like to garden and live in a city, you may have to pay to have space in the community garden. Someone in a rural area can just grow plants in their yard.
The shared resources are not inherently better in cities or rural areas. They are different. If you are comparing the cost of living in different areas, consider your interests and whether they have a greater cost in one locale or another. Additionally, consider the accessibility of these activities in different places.
Another unexpected cost of individuals who move from different locales is social costs. These can exist anywhere, but in certain communities they are more necessary to feel like you are truly part of the community. Social clubs often have exorbitant fees. These social clubs exist in Washington, DC as well, but in an urban area with diverse activities, they feel less necessary for a sense of belonging than in some communities. I have enjoyed the times folks invited me to tag along to events or dinner at The University Club, but I do not feel like I am missing out on a social life by forgoing that $5,000 annual membership fee.
While country clubs and social clubs are more obvious fees, other social costs exist in different living situations. If you routinely attend happy hour with a group of people, those costs add up quickly. If you instead participate in a local run club, costs are likely minimal. Consider what costs you would deem necessary to feel completely at home in a community when assessing its cost.
Land and Maintenance Costs
My parents’ mortgage is a little more than half of our mortgage, but they certainly spend equal to or greater than our mortgage on their home when we include all maintenance costs. They also enjoy living on more than three acres, growing fruits and vegetables in the garden, buying beautiful flowers, and making sure their deck is in pristine condition. I enjoy my pool deck and further enjoy that part of what I spend on my home is making sure someone else takes care of it. None of these preferences are incorrect or better than others, but they all have varying costs that you should consider when comparing different locations to live.
In cities and some suburban communities, you will likely pay an HOA fee. We pay this as part of our housing cost, and it gives us access to a pool, gym, dog park, grilling stations, parking garage, and more. It also pays for the maintenance of these shared resources as well as larger building maintenance like making sure elevators work, cleaning the garage, shoveling snow off the sidewalk, washing the windows, and adding the necessary chemicals to the pool for sanitation.
In a rural area or a suburban area without an HOA, the homeowner is responsible for these costs. Using my parents as an example, they have to pay separately to:
Own and maintain a lawn mower and its fuel to take care of their lawn
Acquire flowers for their gardens, buy mulch for planting, and pay someone to water plants when they travel
Saw up a tree when it falls in their yard and organize the clearing of the wood
Plow their driveway, by either owning a truck and plow or paying someone to do this for them, shovel sidewalks, and put down salt as needed
Maintain the outside of their home by painting, washing windows, and cleaning (or hiring someone else to do so)
Own the basic tools for household maintenance rather than rely on shared community tools
All of these tasks are taken care of for me by paying a flat HOA fee. For my parents, they will have some months where they only need to spend $100 to buy a few plants, but they will also have months where they get three feet of snow on two different occasions and have a tree fall on the powerline, forcing them to deal with the tree and run their generator to get the power up and running. In general, living in a rural location will lead to a greater variance in monthly land and maintenance costs while urban areas have more fixed and predictable costs.
What Location Costs the Most?
It depends. So much of the cost of your life depends on the expectations and requirements you have for your life as well as any expenses that make you feel at home and part of a community. Sure, a two-bedroom apartment will continue to cost less in the suburbs or Las Vegas than downtown Washington, DC. When I lived in Las Vegas, my high savings rate had me living off of just over $9 an hour for some time without feeling like I lacked the important joys in my life. I will not be trying to live off of $9 an hour in Washington, DC. However, if we consider that about $75,000 sustains our lifestyle in Washington, DC, it would be possible to spend more than that in Las Vegas if we had certain lifestyle preferences. Figure out what activities and community qualities are important to you and where those important activities and qualities are accessible and affordable for you. This can help you determine where to live to maximize your happiness spending.
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